UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
    (Mark One)
                |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                   For the fiscal year ended December 31, 1996

                                       OR

               o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                          Commission file number 0-610
                               EQUITY OIL COMPANY
             [Exact name of registrant as specified in its charter]

                Colorado                       87-0129795
         (State or other jurisdiction of              (I.R.S. Employer
          incorporation or organization)            Identification Number)

      10 West Broadway, Suite 806                 84101
          Salt Lake City, Utah                  (Zip Code)
    (Address of principal executive offices)

       Registrant's telephone number, including area code: (801) 521-3515

           Securities registered pursuant to Section 12(b) of the Act:
     Title of each class          Name of each exchange on which registered

          None                                         None

           Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock (par value, $1 per share)
                                [Title of class]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained  herein and will not be contained to the best
of  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes X No

As of February 24, 1997,  12,751,100  common  shares were  outstanding,  and the
aggregate market value of voting stock held by  non-affiliates of the registrant
was approximately $41,000,000.

                       Documents Incorporated by Reference
1.  Definitive  proxy  statement to be filed in connection  with Issuer's Annual
Stockholders'  Meeting  to be held on May 14,  1997  and more  particularly  the
information  contained on pages 2 through 5 are  incorporated  by reference into
Part III of this report.
                                                                Total Pages 59


INDEX TO EXHIBITS IS FOUND ON PAGE 45
    
<PAGE>



                                     PART I
ITEM 1. Business

GENERAL DEVELOPMENT OF BUSINESS

Equity Oil Company  ("Equity" or "the Company") was originally  incorporated  in
the state of Utah in 1923. In 1958, it was merged into its subsidiary, Weber Oil
Company, a Colorado  corporation.  The surviving company adopted the name Equity
Oil Company.

Equity  is an  independent  oil  and gas  exploration  and  production  company,
currently  conducting  its business in nine states and two  Canadian  provinces.
Equity  is also a 50%  shareholder  in  Symskaya  Exploration,  Inc.,  which has
operations in Russia.  Headquartered  in Salt Lake City,  Utah, the Company also
maintains  an  exploration  office in Denver,  Colorado,  and a field  office in
Vernal, Utah. The Company has 18 full-time employees.

More  than 90% of the  Company's  revenues  come  from the sale of crude oil and
natural gas. Accordingly,  the Company continually seeks to increase its oil and
gas reserves through exploration, development of existing properties, and/or the
purchase of existing producing properties.

The Company's exploration office in Denver is responsible for the generation and
review  of  exploration  prospects,  and  participates  in the  planning,  where
necessary,  to drill the prospects.  These include prospects developed in-house,
as well as those presented by independent  third parties.  The general  drilling
practice  of the Company is to  participate  in projects on a 25% to 50% working
interest basis.  Participation  varies with each prospect  depending on location
and the attendant financial and technical risk.

In addition to its exploration  ventures,  the Company works in conjunction with
other working  interest  owners in producing  properties to identify and develop
projects  that will  enhance and expand the  productive  capacities  of existing
wells and  fields.  The  Company  also  investigates  opportunities  to purchase
interests in properties with existing production.

A discussion of the Company's  activities during 1996 is set forth below in ITEM
2. Properties, under the caption Present Activity.



                                        

<PAGE>



NARRATIVE DESCRIPTION OF BUSINESS

PRINCIPAL PRODUCTS AND MARKETS

The  Company  produces  crude oil and natural  gas.  During the last five years,
revenues from the sales of these  products  have  accounted for more than 90% of
the total revenues of the Company, while remaining revenues have come from other
sources,  including  interest  income on  invested  funds,  partnership  income,
operating  overhead  reimbursements,   and  the  sales  of  various  undeveloped
properties.

The Company's crude oil production is sold under short-term contracts at current
posted  prices  for  each   geographic   area,   less   applicable   quality  or
transportation   tariffs  plus  negotiated  bonuses.   Prices  are  set  by  oil
purchasers, and their methods of determining prices are not within the knowledge
of the registrant,  but it is assumed they are influenced by regional,  national
and  international  factors  relating to oil supply and demand.  (See discussion
under Major Customers)

The bulk of the  Company's  natural gas  production is sold in the Gulf Coast of
Texas, in the Canadian province of Alberta, in Wyoming, and in California.

In the Gulf Coast of Texas, the majority of the Company's gas production is sold
on the spot  market.  Contracts  are  typically  of short  duration,  and prices
received  vary in concert  with the  futures  markets.  While the areas in Texas
where the Company has its major gas reserves are characterized by large reserves
of other companies,  the Company has  historically  been able to sell all of its
productive  capacity,  and  expects to be able to  continue to do so in the near
future.

The majority of the natural gas produced in Alberta is taken in kind and sold on
the spot market  under short term  contracts.  The  Company's  contracts  do not
provide for minimum production  amounts;  however,  the Company has historically
been able to produce most of the wells at or near capacity, and has been able to
sell all of the gas produced.

The  majority  of gas sold in Wyoming is  marketed  under a contract at an index
price that  changes  monthly.  The  contract is subject to  renegotiation  on an
annual  basis.  The Company sells gas produced in California on the spot market,
where prices also vary on a monthly basis.

The Company has not historically hedged significant amounts of either oil or gas
production.

SEASONALITY

The Company experiences some seasonality in gas sales revenues. Net sales prices
and production tend to rise during the winter months compared to the rest of the
year.  However,  since over 80% of the  Company's oil and gas revenues come from
the sale of oil, the seasonal impact on gas sales is not significant.

MAJOR CUSTOMERS

All oil and gas produced in the U.S. or Canada is sold to unaffiliated pipeline,
refining,  or  crude  oil  purchasing  companies.  These  companies  may  be the
operators  of the  fields  where  the  product  is  produced,  or  owners of the
pipelines which transport the products. Previous changes of ownership or changes
in  operator   have  not  resulted  in  an   interruption   of   production   or
transportation,  and  consequently  not had a  material  adverse  effect  on the
business of the Company.

Approximately  70% of the  Company's  total  oil  production,  originating  from
several  different  fields,  is sold to JN Petroleum  Marketing,  Inc (JN).  The
Company  does  not  believe  that the loss of JN as a  customer  would  have any
material impact on the Company,  as oil production from the various fields could
readily be sold to other crude oil  purchasers.  No other customer  accounts for
more than 10% of the Company's sales.

COMPETITION

Equity is part of a highly competitive  industry composed of many companies that
are significantly  larger and possess greater resources than the Company.  These
include  major  oil  companies  as well as  large  independent  exploration  and
production  companies.  Their  size and  resources  may allow  these  parties to
operate at a greater competitive advantage than Equity.

During  1996 the  Company  did not  experience  any  competitive  factors  which
impaired  its  production  or sale of oil and  gas,  nor did it  experience  any
difficulties in contracting for drilling and related
equipment.



                                        

<PAGE>



GOVERNMENT REGULATION

Drilling  activities  of the  Company  are  regulated  by  several  governmental
agencies  in  the  United  States,   both  federal  and  state,   including  the
Environmental  Protection Agency,  Forest Service,  Department of Wildlife,  and
Bureau of Land  Management,  as well as state oil and gas  commissions for those
states in which the Company has operations.  Canadian  operations are subject to
similar requirements.

The Company believes that it is currently in compliance with all federal, state,
and local environmental regulations,  both domestically and abroad. Further, the
Company does not believe that any current environmental  regulations will have a
material impact on its capital expenditures or earnings, nor will they result in
any competitive disadvantage to the Company.

FINANCIAL INFORMATION ABOUT FOREIGN OPERATIONS

Foreign  operations  of the  Company are  currently  conducted  in the  Canadian
provinces  of Alberta and British  Columbia.  Financial  information  concerning
these operations can be found in Footnotes 5 and 9 to the financial  statements.
For financial reporting purposes,  the Company does not allocate any general and
administrative  expenses to its Canadian operations,  nor are they burdened with
indirect exploration overhead expenses.  Direct exploration expenses are charged
to the  geographic  area in  which  they  occur.  Because  the  majority  of the
Company's   exploration   efforts  occur  in  the  United  States,  very  little
exploration  expenses are allocated to the Canadian  operations.  As a result of
these and other  factors,  the  operating  profit of the Canadian  operations is
significantly  greater  than the  operating  profit in the  United  States.  The
Company does not believe that its Canadian operations are attended with any more
risk than those in the United States.

Symskaya  Exploration,  Inc.,  in which  the  Company  owns a 50%  interest,  is
conducting operations in Russia.  Further discussion of this venture is found in
ITEM 2. Properties, under the caption Present Activity, and in Footnotes 6 and 9
in the financial statements.

ITEM 2. PROPERTIES

The principal properties of the Company consist of developed and undeveloped oil
and gas leasehold  interests.  Developed leases are comprised of properties with
existing  production,  where lease  terms  continue as long as oil and/or gas is
produced. Undeveloped leases include unproven acreage on both public and private
lands.  The leases have set terms and  terminate  at the time  specified in each
lease unless oil and gas in commercial  quantities are discovered  prior to that
time.

The  Company  also has a fee  interest  in 3,968 net acres of oil shale lands in
Colorado.  These  properties  have not  generated  significant  revenue  for the
Company.  In 1994,  the Company  entered  into a lease  agreement  with  another
company for a five year oil and gas lease on these lands.

RESERVES

The  information  found in  Footnote 9 to the  financial  statements  concerning
proved  reserves  represents the Company's  best estimate of product  quantities
expected to be produced from the  properties  based on geologic and  engineering
data, as well as current economic and operating conditions.  The presentation is
made in accordance with Securities and Exchange  Commission  guidelines,  and is
based on prices and costs in effect on December 31, 1996.

The calculation of future net cash flows relating to proved oil and gas reserves
is  sensitive  to price  variations,  and is based on the  prices in effect at a
specific  point in time.  The  weighted  average  net  prices  used for the 1996
reserve  calculation  were $24.36 per barrel of oil and $2.84 per Mcf of natural
gas, which compares to $18.02 and $1.38 in 1995.

No estimates  of reserves  have been filed with or included in any report to any
other federal agency during 1996.


                                        

<PAGE>



PRODUCTION

The following table sets forth the Company's  production,  average sales prices,
and average lifting costs by geographic area for 1996, 1995, and 1994:


<TABLE>
<CAPTION>

                            1996            1995            1994           1996           1995           1994
                             Oil             Oil             Oil            Gas            Gas            Gas
Area                       (Bbls)          (Bbls)          (Bbls)         (MMCF)         (MMCF)         (MMCF)
Production
<S>                       <C>             <C>             <C>                <C>             <C>            <C>
 Colorado                 363,080         373,766         387,919            106             84             27
 Texas                     29,186          32,861          42,603            315            356            439
 Montana                   32,845          23,385          17,889             17              9              -
 Utah                      16,769          10,069          12,216              -              -              -
 Wyoming                   68,924          44,283          22,956            519            422            398
 North Dakota               6,768           5,869           5,370              3              2              1
 Oklahoma                     607             640             664              -              -              -
 California                     -               -               -            365              5              -
 Other States                  13               6              30              -              2             15
                          -------         -------         -------          -----            ---            ---
 Total U.S.               518,192         490,879         489,647          1,325            880            880

 Alberta                  113,756         116,252         108,466            586            568            238
 B.C.                       4,769          12,249          11,430              2              3              2
                            -----          ------          ------            ---            ---            ---
 Total Canada             118,525         128,501         119,896            588            571            240

Grand Total               636,717         619,380         609,543          1,913          1,451          1,120
                          =======         =======         =======          =====          =====          =====

AVERAGE PRICE
                                                                                                        
  U.S.                    $21.49          $17.44          $15.88          $ 1.79         $1.67          $2.18
  Canada                  $16.99          $15.49          $14.30          $ 1.01         $ .74          $1.57
  Total                   $20.65          $17.00          $15.57          $ 1.55         $1.31          $2.05

LIFTING COSTS
  U.S.                    $ 7.92          $ 7.75          $ 6.60          $  .66         $ .74          $ .91
  Canada                  $ 6.09          $ 3.75          $ 4.32          $  .37         $ .19          $ .46
------------------------  --------------  --------------  --------------  -------------  -------------  -------------
  Total                   $ 7.58          $ 6.85          $ 6.15          $  .57         $ .53          $ .81
========================  ==============  ==============  ==============  =============  =============  =============
</TABLE>

PRODUCTIVE WELLS AND ACREAGE

The  location  and  quantity  of  Equity's  productive  wells and  acreage as of
December 31, 1996 are as follows:


 Productive Wells:                             Gross                      Net
    Oil:
        United States                            714                     77.772
        Canada                                   243                     11.625
    Gas:
        United States                             57                     14.565
        Canada                                    11                      2.159
                                                  --                      -----
    Total Productive Wells                     1,025                    106.121
                                               =====                    =======

    Developed Acreage
        United States                        123,584                      9,562
        Canada                               126,960                      2,981
                                             -------                      -----
    Total Developed Acreage                  250,544                     12,543
                                             =======                     ======


                                        

<PAGE>




UNDEVELOPED ACREAGE

The  following  table sets  forth the  Company's  undeveloped  oil and gas lease
acreage as of December 31, 1996 by geographic area:



                                       Gross                    Net
Area                                  Acreage                 Acreage
Colorado                                 12,518                 10,419
Texas                                     4,427                    975
Montana                                  62,087                  8,167
Utah                                      7,156                    880
Wyoming                                  12,550                  3,880
California                               13,909                  3,040
North Dakota                              7,863                  3,359
Other States                                 40                      8
                                        -------                 ------
Total U.S.                              120,550                 30,728

Alberta                                  29,573                  3,573
                                         ------                  -----
Total Canada                             29,573                  3,573
                                         ------                  -----
Grand Total                             150,123                 34,301
                                        =======                 ======


Through its 50% ownership in Symskaya Exploration, Inc., the Company also has an
indirect 50% interest in an additional 1,100,000 gross acres in Russia.  Further
discussion  of this  venture is found in ITEM 2.  Properties,  under the caption
Present Activity, and in Footnotes 6 and 9 to the financial statements.

DRILLING ACTIVITY

During 1996, the Company participated in the drilling of 25 gross wells. Of this
total,  19 were  completed as producing oil and gas wells and 6 were plugged and
abandoned as dry holes.



Gross exploratory wells   Status               1996          1995          1994
drilled:                  ------               ----          ----          ----
     United States        Productive             15             8             7
                          Dry                     6             4             6
     Canada               Productive              -             -             -
                          Dry                     -             -             -
Gross development wells
drilled:
     United States        Productive              3             3             5
                          Dry                     -             -             -
     Canada               Productive              1             5             2
                          Dry                     -             -             -


Net exploratory wells     Status               1996          1995          1994
drilled:
     United States        Productive           3.95          1.05          1.10
                          Dry                  1.64          1.08          1.48
     Canada               Productive              -             -             -
                          Dry                     -             -             -
Net development wells
drilled:
     United States        Productive           1.19          1.30           .80
                          Dry                     -             -             -
     Canada               Productive            .50          2.14           .90
                          Dry                     -            -              -



                                       

<PAGE>



PRESENT ACTIVITY

In 1996,  by following  the growth  strategy  implemented  in 1994,  the Company
completed the second  consecutive year of reserve  replacement in excess of 150%
of  production.  The  Company's  strategy  to replace  its oil and  natural  gas
reserves is comprised of a balanced approach in four areas. The four elements of
that strategy are:

         *Focused exploration  drilling in North America
         *Development  drilling and  exploitation  in North America
         *Acquisition of proved reserves in North America
         *International exploration in Russia

Following  is  background  information  concerning  the  Company's  current  and
expected activities as they relate to this strategy:

FOCUSED EXPLORATION IN NORTH AMERICA

The principal focus of 1996  exploration was the Sacramento Basin in California,
where 17 wells were  drilled,  resulting  in 13 gas  completions.  Each of these
wells was drilled  using 3-D seismic data  acquired in 1995 and 1996.  Including
the 3 wells  completed  in this  area  in  1995,  the  Company  now has  working
interests in 16 gas wells.  12 wells are on production at a combined  daily rate
of 9.4 million cubic feet per day. Since many of these wells were drilled in the
fourth  quarter of 1996,  and have been on production for a very short time, the
Company's  ability to accurately  assess overall long term production  rates and
ultimate recoverable reserves is somewhat limited.

During 1995 and 1996 the Company  participated  in the  acquisition of 98 square
miles of 3-D seismic data in 6 different  surveys in the  Sacramento  Basin.  40
possible additional drill sites have been identified, and present plans call for
the  drilling of 20  exploratory  wells on those  surveys in 1997.  A seventh 17
square mile survey on the Company's  Davis Ranch prospect should be completed in
the first  quarter  of 1997,  and the  Company  expects to drill 2 wells on that
survey  in 1997.  Equity's  working  interest  in the  completed  wells  and the
prospects vary from a high of 70% in the Davis Ranch prospect to a low of 18.75%
in the Moon Bend prospect.

During the past several years, the Company has relied to a great extent on third
party prospect  generation for its  exploration  program.  Equity began again in
1996 to  actively  promote  and  participate  in  drilling  prospects  that were
generated  by the  Company.  One of these  prospects,  the North  Riley Ridge in
Southwestern Wyoming, may represent a significant discovery.  The No. 1-35 North
Riley Ridge well was drilled and  completed in the 1st Frontier  formation,  and
tested at a rate of 3.6 million  cubic feet per day from an estimated 48 feet of
net pay. It is currently  shut in awaiting a pipeline  connection.  Drilled on a
17,160  acre  Federal  oil and gas  unit,  the  well is  located  on a  prospect
developed by Equity.  Equity has an 18.75% working  interest in the well.  Other
working  interest  owners include Griggs Oil, Inc., who is the operator,  with a
15.625% interest,  and Nuevo Energy Company with a 50% interest.  The timing and
extent of further drilling on

                                       

<PAGE>



the Unit will depend  upon  testing  results,  but the  potential  may exist for
additional development locations associated with this new
field discovery.

In  addition  to 1997  drilling  in the  Sacramento  Basin  of  California,  and
additional  drilling  that may take place at the North  Riley  Ridge  Unit,  the
Company has present plans to participate in 6 other exploratory  tests, 5 in the
Rocky Mountains and one in Texas.

DEVELOPMENT DRILLING AND EXPLOITATION IN NORTH AMERICA

The logical  outgrowth of any exploration or acquisition  program is the ongoing
development  of  reserves  and  production  that were not  developed  by initial
drilling. Prior to 1994, the Company had three core properties that had specific
development and/or exploitation  potential:  the Cessford field in Alberta,  the
Siberia Ridge field in Wyoming, and the Ashley Valley field in Utah.

Since 1994,  development  activities have been focused on these three areas. The
Company has recorded nearly 100%  development  drilling  success at Cessford and
Siberia Ridge, participating in a total of 13 wells.

During 1996, the Company  successfully  drilled 4 development  wells with a 100%
success  rate,  resulting  in 3 oil wells  and 1 gas well.  The first of the oil
wells was an infill well  drilled on the Cessford  property in Alberta,  Canada,
the second was drilled on the Sage Creek field in Big Horn County,  Wyoming on a
property  acquired in 1995, and the third was an extension well drilled adjacent
to the Spearhead Ranch Field in Converse  County,  Wyoming.  The single gas well
was a  development  well drilled with  Marathon Oil Company at the Siberia Ridge
field  in  Sweetwater  County,   Wyoming.   In  addition,   prior  to  beginning
exploitation  work at the Ashley  Valley field  located near Vernal,  Utah,  the
Company  doubled  its  working  interest  there  in 1996  through  a  series  of
acquisitions.

As a result of exploration  drilling and  acquisitions  in the last three years,
the list of properties slated for development drilling and exploitation work has
grown to  include  the  Mountain  Oil and Gas  properties  in  Wyoming,  where a
comprehensive  reservoir  study of the Sage Creek Field was recently  completed,
the West Padroni property in Colorado,  the East Rangely Field in Colorado,  and
the North Riley Ridge Unit in Wyoming.

In 1997, the Company is planning additional  development drilling in the Siberia
Ridge Field, the Cessford field,  and the Sage Creek field.  Equity also expects
to see the initial  implementation  of a water flood project in the Michelle Kay
Field in Kent County, Texas where Equity has a 27.5% working interest.

ACQUISITION OF PROVED RESERVES IN NORTH AMERICA

As the Company  developed its growth  strategy in 1994,  it recognized  that the
replacement of reserves  through drilling alone would not be adequate to replace
production and increase the Company's declining reserve base.  Accordingly,  the
Company adopted a strategy element of reserve acquisition to be financed in its

                                       

<PAGE>



initial  stages by the use of a $20  million  revolving  credit  facility.  That
program has resulted in net  acquisitions  of 1.7 million barrels of oil and 1.3
MMCF of gas in 1995 and 1996, for a total  original  investment of $5.1 million,
or a net  acquisition  cost  of  $2.65  per  barrel  of  oil  equivalent.  These
properties  will produce  approximately  23% of forecast oil production in 1997,
and 17% of total BOE production. In addition, the properties have contributed in
excess of $1 million in incremental discretionary cash flow.

The Company made two  principal  acquisitions  in 1996,  both in  Colorado.  The
first,  the purchase of 14 wells in Rio Blanco County,  added 332,000 barrels of
proved developed  reserves at a cost of $1.4 million,  or $4.22 per barrel,  and
added approximately 100 barrels per day of production. The wells are adjacent to
the Rangely Weber Sand Unit,  where Equity  participated in the first commercial
well in 1946. The Company  believes that its knowledge of the area will allow it
to enhance production and develop additional  reserves associated with the wells
purchased.  The second,  the  purchase of 8 producing  wells in the West Padroni
field in Logan  County,  added  292,000  barrels of proved  developed  heavy oil
reserves at a cost of $386,000, or $1.32 per barrel, and added approximately 130
barrels per day of  production.  In each case,  the  Company has a 100%  working
interest and operates the properties.

INTERNATIONAL EXPLORATION IN RUSSIA

Equity began its efforts to explore for oil in Russia in December of 1991.  Over
a period  of five  years,  Symskaya  Exploration,  Inc.,  which  is a 50%  owned
subsidiary,  has been able to obtain a 25 year  License and  Production  Sharing
Contract to explore,  develop and  produce  hydrocarbons  on a 1.1 million  acre
tract in the Krasnoyarsk Krai of Eastern Siberia.  During 1996, the drilling and
testing of a 14,100 foot exploratory well was completed. Unfortunately, the well
did not reach the  principal  objective at an estimated  depth of 14,500 feet as
drilling was terminated due to mechanical problems that occurred at 14,100 feet.
Nevertheless,  the well  enabled  Symskaya to collect a large amount of geologic
and geochemical  data related to the Symskaya area. This data appears to support
the presence of a major  structure  on the  concession  drilled,  as well as the
possibility  for the  development  of oil  accumulations  in the zones that were
tested at a higher structural location. No assurance can be given, however, that
any hydrocarbons will be discovered.

Through the end of 1996,  Symskaya has invested a total of $15.5  million  ($9.2
million net to Equity) in its Russian operations, and has fulfilled the specific
obligations of its License and Production  Sharing Contract which called for the
investment  of $12  million  in the first five years of the  License  term.  The
License was issued in November of 1993,  and,  consequently,  as of December 31,
1996,  Symskaya has a paid-up 22 year right to continue its exploration  efforts
on the 1.1 million acre license area. The only specific financial commitment for
maintenance  of the License is the payment of an annual License fee of $100,000,
which  Symskaya  intends to pay.  Symskaya  remains  convinced of the  project's
geologic merit, and is actively engaged in the pursuit of additional  financing.
However, because of the

                                       

<PAGE>



uncertainty regarding further exploration  activities,  and the probability that
the Company will not recover its  investment  in and  advances to Symskaya,  the
Company charged its remaining  investment in and advances to Symskaya to expense
as of  December  31,  1996.  The  Company  has no current  plans to fund  future
exploratory drilling on the Symskaya concession.

The License area is located in a country that may be considered economically and
politically  unstable.  As a result,  the Symskaya project is subject to all the
risks of an  exploratory  well in addition to the economic and  political  risks
associated with the Russian  Federation and local government,  including but not
necessarily   limited  to  the   cancellation  or  renegotiation  of  contracts,
expropriation,  tax and royalty increases, foreign exchange controls, import and
export  regulations,  environmental  regulations and other laws that may have an
adverse impact on the operation.  There are also increased  logistical  problems
and costs associated with exploration activities in such a remote region.

Further information concerning the Company's investment in Symskaya Exploration,
Inc. may be found in Footnotes 6 and 9 to the financial statements.

DELIVERY COMMITMENTS

The Company is not  obligated to provide any fixed or  determinable  quantity of
oil or gas in the future under any existing contracts or agreements.

ITEM 3. LEGAL PROCEEDINGS

No material legal proceedings are pending.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of the fiscal year covered by this report,  no matters
were  submitted  to  the  security  holders  for a  vote,  and no  proxies  were
solicited.


PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED MATTERS

The Company's stock is traded on the over-the-counter market and quoted over the
NASDAQ  National  Market  System using the symbol EQTY.  High and low prices for
1996 and 1995 are as follows:



Quarter                                      High                    Low
-------                                      ----                    ---

1996 - 4th                                   3 5/8                  2 13/16
       3rd                                   5                      3 1/16
       2nd                                   6 1/2                  4 3/8
       1st                                   5 7/8                  4

1995 - 4th                                   6 1/8                  3 3/4
       3rd                                   7 1/8                  4
       2nd                                   4 5/8                  3 1/8
       1st                                   4                      3 3/8


          The approximate number of registered stockholders of the Company as of
February 24, 1997 is 1,847.

          No  unregistered  equity  securities of the registrant  have been sold
during the period covered by this report.


                                       

<PAGE>



ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                              1996              1995                1994               1993                 1992
         
 
<S>                       <C>               <C>                  <C>               <C>                  <C>        
Net Sales                 $16,115,125       $12,259,739          $11,713,498       $12,729,899          $15,222,887

Other Income                  312,759           457,837              196,431            43,096              277,289

Lease Operating
 Costs                      5,912,128         5,093,782            4,658,115         5,293,628            5,481,102

DD&A                        4,292,237         3,843,442            5,011,155         5,090,744            4,868,084

Impairment of
Proved Oil and
Gas Properties                237,279         2,471,146                  -0-               -0-                  -0-

Equity Loss and Impairment
of Investment in Symskaya
Exploration, Inc.           9,204,394               -0-                  -0-               -0-                  -0-

Property
Writedowns                        -0-               -0-                  -0-         3,292,624                  -0-

3-D Seismic                   757,964           237,604                  -0-               -0-                  -0-

Exploration
Expense                     2,336,405         1,633,612            1,718,339         1,737,923            2,459,873

General and
Administrative              2,030,811         1,908,778            1,560,675         1,607,892            1,939,682

Income (Loss) Before
Cumulative Effect
of Accounting
Changes                    (5,502,646)       (1,254,812)            (360,830)       (2,476,631)             801,440

Income (Loss) Per
Common Share Before
Cumulative Effect of
Accounting Changes             $ (.43)           $ (.10)              $ (.03)           $ (.20)               $ .07
                                =====             =====                =====             =====                 ====

Total Assets              $50,181,437       $53,947,050          $51,908,336       $53,322,749          $58,154,880

Long Term Debt              8,878,830         4,918,830              460,000           920,000            1,380,000

Cash dividends
per share                        $.00              $.00                 $.00              $.05                 $.20

</TABLE>


                                       

<PAGE>



ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL.  The  following  discussion  provides  information  on the  results  of
operations  for the  three  years  ended  December  31,  1996 and the  financial
condition,  liquidity  and  capital  resources  as of  December  31,  1996.  The
financial  statements and the notes thereto contain  detailed  information  that
should be referred to in conjunction with this discussion.

The  profitability  of the  Company's  operations in any  particular  accounting
period will be directly  related to the average  realized  prices of oil and gas
sold,  the  volume  of oil and gas  produced  and the  results  of  acquisition,
development and exploration  activities.  The average realized prices of oil and
gas will  fluctuate  from one period to another  due to market  conditions.  The
aggregate  amount of oil and gas produced may fluctuate based on development and
exploitation  of oil and gas  reserves  and  other  factors.  Production  rates,
value-based  production taxes, labor and maintenance expenses are expected to be
the  principal  influences  on  operating  costs.  Accordingly,  the  results of
operations  of the Company  may  fluctuate  from  period to period  based on the
foregoing and other factors.

OIL AND GAS  RESERVES.  1996 drilling and  acquisition  activities in the United
States and Canada added 1.51 million  barrels of oil equivalent to the Company's
proved reserve base, resulting in a net 5% gain in its reserves,  replacing 158%
of 1996 oil and gas production.  At year end 1996, proved reserves stood at 8.37
million  barrels of oil and 17.6 billion cubic feet of natural gas.  Using a 10%
discount rate and year end oil and gas prices and operating  costs as prescribed
by the Securities and Exchange Commission,  the pre-tax net present value of the
Company's  reserves at year end 1996 totaled $79 million,  an 84% increase  over
the year end value in 1995 of $43 million. After-tax values were $55 million and
$30 million, respectively.

In 1995 the Company added 1.44 million barrels of oil equivalent,  equal to 167%
of 1995 oil and gas  production.  Year end 1995 proved reserves of oil were 7.75
million  barrels,  an increase of 6% over year end 1994 reserves of 7.31 million
barrels.  Natural gas proved  reserves at year end 1995 were 18.02 billion cubic
feet,  5% higher  than at year end 1994.  Barrel  equivalent  reserves  of 10.75
million barrels were 6% higher on a year to year basis.

EQUITY LOSS AND IMPAIRMENT OF INVESTMENT IN SYMSKAYA EXPLORATION, INC. In August
of 1996, Symskaya Exploration, Inc., the Company's 50% owned subsidiary, plugged
and  abandoned  the Lemok #1 well.  Symskaya  subsequently  charged the drilling
costs of the well to expense. The Company's equity share of the loss in Symskaya
of $5,250,000 was reflected in the Statement of Operations for the quarter ended
September 30, 1996.

                                       

<PAGE>

Due to the amount of  uncertainty  relating to Symskaya's  obtaining  additional
outside  financing and proceeding with  development of the License area, and the
probability  that the Company  will not recover its  investment,  the  remaining
capitalized costs were written off in the fourth quarter of 1996, resulting in a
charge to expense of $3,954,394.  Further discussion of this venture is found in
ITEM 2. Properties, under the caption Present Activity, and in Footnotes 6 and 9
to the financial statements.

ADOPTION OF SFAS NO. 121. As  discussed in Note 2 to the  financial  statements,
the Company  adopted SFAS No. 121,  Accounting  for the Impairment of Long Lived
Assets and Assets Held for  Disposal,  effective  July 1, 1995.  The adoption of
this  accounting  standard  resulted in non-cash  charges for the  impairment of
proved oil and gas properties in the amount of $2,471,146 ($1,557,563 after tax)
in 1995.  Non-cash  impairment  charges of  $237,279  ($149,557  after tax) were
recorded  during 1996.  SFAS No. 121 requires  successful  efforts  companies to
evaluate the  recoverability  of the carrying  costs of their proved oil and gas
properties at a field level,  rather than on a company-wide  level as previously
allowed  by the  Securities  and  Exchange  Commission.  The SFAS  No.  121 test
compares the expected undiscounted future net revenues from each producing field
with the related net capitalized  costs at the end of each period.  When the net
capitalized costs exceed the undiscounted  future net revenues,  the cost of the
property is written down to fair value,  which is  determined  using  discounted
future net revenues  from the  producing  field.  These are  non-cash  financial
statement  events  only.  There has been no decrease in the quantity or expected
future net revenue from the Company's  reserves,  nor is there any impact on the
Company's cash flows.


RESULTS OF OPERATIONS
---------------------

COMPARISON OF 1996 WITH 1995

OIL AND GAS PRODUCTION AND SALES. The Company recorded  increases in oil and gas
production and sales during 1996. Oil production  rose 3%, from 619,380  barrels
in 1995 to 636,717  barrels in 1996. Gas  production  rose 32%, from 1.45 Bcf in
1995 to 1.91 Bcf in 1996. The  production  increases were a direct result of the
Company's  successful  exploration  and  development  drilling  and  acquisition
programs.  Increases in production  were  augmented by increases in both oil and
gas average prices  received  during the year.  The Company's  average gas price
received  during 1996 was $1.55,  up 18% from $1.31  received  during 1995.  Oil
prices  increased 21% from $17.00 in 1995 to $20.65 in 1996. The  combination of
increased  production and increased prices resulted in an increase of 31% in oil
and gas sales for 1996.  Further  details of production and pricing are found in
Item 2. Properties, under the caption Production.


                                       

<PAGE>


OTHER INCOME. Other income in 1995 includes the recognition of $178,553 of lease
revenue  deferred  in 1994.  There  was no  similar  transaction  in 1996.  This
reduction in other income was partially  offset by increased  overhead fees from
operated properties.

LEASE  OPERATING  COSTS.  Lease  operating costs increased 16% in 1996 over 1995
levels.  The increase was directly  attributable  to the increases in production
discussed above,  higher value-based  production taxes associated with increased
product prices, and a greater number of wells on production.  1996 was the first
full year of  operations  for the wells  drilled and acquired  during  1995.  In
addition, the Company added approximately 40 additional wells during 1996.

DEPRECIATION, DEPLETION, AND AMORTIZATION (DD&A). Increased DD&A charges in 1996
are a direct reflection of increased production and the addition of new wells to
the Company's  depletion base. As discussed above,  1996 was the first full year
of operations for the wells drilled and acquired  during 1995. In addition,  the
Company added approximately 40 additional wells during 1996.

IMPAIRMENT OF PROVED OIL AND GAS PROPERTIES.  As discussed previously,  included
in the  Statement of Operations  for 1996 and 1995 are non-cash  charges for the
impairment  of proved  oil and gas  properties  in the  amount of  $237,279  and
$2,471,146,  respectively.  The 1995 charge resulted from the Company's adoption
of SFAS No. 121, effective July 1, 1995.

EQUITY  LOSS AND  IMPAIRMENT  OF  INVESTMENT  IN SYMSKAYA  EXPLORATION,  INC. As
discussed  above,  the Company recorded an equity loss in Symskaya of $5,250,000
for the quarter ended  September 30, 1996.  In the fourth  quarter of 1996,  the
Company's remaining capitalized costs were written off, resulting in a charge to
expense  of  $3,954,394.  The  total  charge to  earnings  related  to  Symskaya
Exploration, Inc. for 1996 was $9,204,394 ($6,592,206 after tax).

3-D SEISMIC AND EXPLORATION EXPENSES. During 1996, the Company incurred $757,964
in 3-D seismic costs related to its California exploration programs, compared to
$237,604 in 1995.  Exploration  expenses  increased as the Company drilled 6 dry
holes in  1996,  including  one dry  hole  which  cost  approximately  $500,000,
compared to 4 dry holes in 1995.

GENERAL  AND  ADMINISTRATIVE   EXPENSES.   The  Company  recorded  increases  in
compensation expense, along with small increases in other administrative charges
during 1996.

INTEREST  EXPENSE.  Subsequent  to the  plugging  of the Lemok #1,  the  Company
discontinued  capitalizing  interest  expense  on  the  investment  in  Symakaya
Exploration,  Inc.  Along with  increased  borrowing on the Company's  revolving
credit facility,  this caused interest expense to increase 126% during 1996. The
Company does not currently expect to capitalize any interest during 1997.



                                       

<PAGE>


INCOME TAX BENEFIT. The Company's income tax benefit is a functionof the loss in
1996.  Details  concerning  the  components  of the tax  benefit can be found in
Footnote 3 to the financial statements.

COMPARISON OF 1995 WITH 1994

OIL AND GAS PRODUCTION AND SALES. The Company recorded  increases in oil and gas
production and sales during 1995. Oil production  rose 2%, from 609,543  barrels
in 1994 to 619,380  barrels in 1995. Gas  production  rose 30%, from 1.12 Bcf in
1994 to 1.45 Bcf in 1995. The  production  increases were a direct result of the
Company's  successful  development  drilling  and  acquisition  programs.  While
increased  gas  production  was offset by falling  gas  prices,  oil prices rose
slightly  during the year. The Company's  average gas price received during 1995
was $1.31,  down 36% from $2.05  received  during 1994.  Conversely,  oil prices
increased 9% from $15.57 in 1994 to $17.00 in 1995.  The increases in production
and oil prices were able to more than offset  lower gas prices,  resulting in an
increase of 5% in oil and gas sales for 1995. Net oil and gas sales for the year
were $12,259,739, compared to $11,713,498 in 1994. Further details of production
and pricing are found in Item 2. Properties, under the caption Production.

OTHER INCOME. Other income in 1995 includes the recognition of $178,553 of lease
revenue  deferred  in 1994.  In  addition,  the  Company  had begun to operate a
greater number of properties, and 1995 figures include increased overhead fees.

LEASE OPERATING COSTS.  Lease operating costs increased 9% over 1994 levels. The
increase was directly  attributable  to the  increases in  production  discussed
above,  along  with a  greater  number  of wells  on  production.  Through  it's
successful  acquisition and drilling programs, the Company acquired interests in
more than 50 additional wells, most of which were added as of July 1, 1995.

DEPRECIATION, DEPLETION, AND AMORTIZATION (DD&A). Decreased DD&A charges in 1995
were a direct reflection of the adoption of SFAS No. 121 as discussed above. The
Company  removed  almost $2.5 million from its depletion  base effective July 1,
1995, most of which was associated with high cost, marginally economic wells.

IMPAIRMENT OF PROVED OIL AND GAS PROPERTIES.  As discussed previously,  included
in the Statement of Operations for 1995 is a non-cash  charge for the impairment
of proved oil and gas properties in the amount of $2,471,146  ($1,557,563  after
tax), which results from the Company's  adoption of SFAS No. 121, effective July
1, 1995.

3-D SEISMIC AND EXPLORATION EXPENSES. During 1995, the Company incurred $237,604
of 3-D seismic  costs,  while no such costs were  incurred in 1994.  Exploration
expenses  decreased  in 1995 due to fewer dry holes.  The Company  drilled 4 dry
holes in 1995, compared to 6 in 1994.


                                       

<PAGE>

GENERAL AND ADMINISTRATIVE EXPENSES. The Company recorded increases in insurance
expense,  research  expense,  and  legal  fees  associated  with  its  increased
activities during 1995, causing general and administrative  expenses to increase
22% over 1994 levels.

INCOME TAX BENEFIT.  The Company's income tax benefit was a function of the loss
in 1995.  Details  concerning  the components of the tax benefit can be found in
Footnote 3 to the financial statements.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

                               1996         1995          1994
-----------------------------------------------------------------
Cash, cash equivalents,
  and temporary cash
  investments              $  837,763  $ 1,467,219   $ 2,830,070

Working capital             2,809,086    3,721,049     4,841,243

Cash provided by
  operating activities      5,807,986    4,143,390     3,747,669

Cash used in
  investing activities      9,476,999    8,414,086     8,092,488

Cash provided by (used in)
  financing activities      3,945,722    4,418,606      (485,852)


CASH AND WORKING  CAPITAL.  Total cash  balances  dropped by 43% from 1995, as a
result of a combination of several events discussed in the following paragraphs.
Working  capital  decreased by 25%.  The  Company's  ratio of current  assets to
current  liabilities  was 2.17 to 1 at December 31, 1996.  The Company  believes
that  existing  cash  balances,  cash flow from  operating  activities,  and the
remaining  borrowing  capacity under its revolving  credit facility will provide
adequate resources to meet its capital,  exploration,  and acquisition  spending
objectives in 1997.

CASH FLOW FROM OPERATING ACTIVITIES. Higher oil and gas sales, which were mainly
a function of increased oil and gas production and higher product  prices,  were
the  principal  factors  behind  a 40%  increase  in cash  flow  from  operating
activities  during  1996.  1995  cash flow from  operating  activities  likewise
increased over 1994 levels due to overall higher product prices and increases in
production.  The  Company  is unable to  accurately  predict  future  cash flows
because of oil and gas price fluctuations.

CASH FLOWS FROM INVESTING  ACTIVITIES.  In 1996, the Company maintained the pace
of capital expenditures recorded during 1995. Capital expenditures  increased 2%
to $7,339,212  compared to  $7,179,528 in 1995.  Included in the 1996 amount was
approximately  $2 million  associated  with proved  property  acquisitions.  The
Company spent approximately $3.1 million on proved property

                                       

<PAGE>



acquisitions  in 1995.  Funds  advanced to Symskaya  Exploration  increased from
$2,745,319 in 1995 to $3,043,952 in 1996, an increase of 11%.  Funds advanced to
Symskaya were  $1,696,261 in 1994. The Company expects that advances to Symskaya
in 1997  will be  minimal  as the  Company  has no  current  plans  to fund  any
exploratory drilling.

CASH FLOWS FROM FINANCING ACTIVITIES.  During 1995, current and former employees
of the Company  exercised  both  Incentive and  Non-Qualified  Stock Options for
171,000 shares of common stock under the Company's Incentive Stock Option Plans.
These exercises generated $681,525 in cash for the Company.  Option exercises in
1996 generated $84,375 in cash. There were no option exercises in 1994.

In March of 1995,  the  Company  obtained a $20  million  Borrowing  Base Credit
Facility (the Facility),  with an initial commitment of $10 million. The Company
used proceeds of $3,960,000 and $4,918,830 in 1996 and 1995  respectively,  from
the Facility to fund capital expenditures,  retire its previous outstanding Note
Payable in the amount of  $920,000,  and for  working  capital  purposes.  As of
December 31, 1996 the  outstanding  balance under the Facility was $8,878,830 at
an average interest rate of 7.69%.

COMMITMENTS.  Under the  terms of  Symskaya's  License  and  Production  Sharing
Contract (PSC), Equity was committed to advance Symskaya a minimum of $6 million
during the first 5 contract years,  representing 50% of the minimum expenditures
called for in the License and PSC, with the  remainder  being funded by Leucadia
National Corporation,  Symskaya's other 50% shareholder. The first contract year
began November 15, 1993. The amounts spent through November 14, 1996, the end of
the third  contract  year,  have  satisfied  all minimum  commitments  required.
Further  discussion  of this venture is found in ITEM 2.  Properties,  under the
caption Present Activity, and in Footnotes 6 and 9 to the financial statements.

OTHER ITEMS. The Company has reviewed all recently issued,  but not yet adopted,
accounting standards in order to determine their effects, if any, on the results
of operations or financial  position of the Company.  Based on that review,  the
Company  believes that none of these  pronouncements  will have any  significant
effects on current or future earnings or operations.




<PAGE>



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of
Directors of Equity Oil Company:

We have audited the financial statements of Equity Oil Company as listed in Item
14(a) of this Form 10-K. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of Equity Oil  Company as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended  December 31, 1996 in conformity
with generally accepted accounting principles.

As discussed in Note 2 to the financial statements,  in 1995 the Company changed
its method of measuring impairment of proved oil and gas properties.



                                        Coopers & Lybrand L.L.P.

                                        Salt Lake City, Utah
                                        February 5, 1997

                                       

<PAGE>



                               EQUITY OIL COMPANY

                                  BALANCE SHEET
                           December 31, 1996 and 1995



        ASSETS                                        1996                 1995
                                                      ----                 ----

Current assets:
   Cash and cash equivalents                 $     787,961       $      511,252
   Temporary cash investments                       49,802              955,967
   Accounts receivable                           2,911,637            2,620,865
   Operator advances                               749,033              633,000
   Federal, state and foreign income
     taxes receivable                              311,393              264,300
   Deferred income taxes                            31,053                    -
   Other current assets                            372,701              378,594
                                                ----------           ----------
           Total current assets                  5,213,580            5,363,978
                                                ----------           ----------

Property and equipment, at cost (successful efforts method):

   Unproved oil and gas properties               2,565,727            2,468,412
   Proved oil and gas properties:
   Developed leaseholds                         10,548,580            8,622,146
     Intangible drilling costs                  65,983,136           62,346,421
     Equipment                                  26,284,602           25,127,047
   Other property and equipment                    765,100              678,728
                                                -----------          -----------
                                               106,147,145           99,242,754
        Less accumulated depreciation,
           depletion and amortization          (61,732,014)         (57,549,855)
                                                ----------           ----------
                                                44,415,131           41,692,899
                                                ----------           ----------
Other assets:
   Investment in Raven Ridge Pipeline
     Partnership                                   405,328              540,220
   Investment in and notes receivable
     from Symskaya Exploration                           -            6,160,442
   Other assets                                    147,398              189,511
                                                ----------           ----------
                                                   552,726            6,890,173
                                                ----------           ----------

           Total assets                        $50,181,437          $53,947,050
                                                ==========           ==========

<PAGE>

                               EQUITY OIL COMPANY

                                  BALANCE SHEET
                           December 31, 1996 and 1995

   LIABILITIES AND STOCKHOLDERS' EQUITY               1996                 1995
                                                      ----                 ----

Current liabilities:
   Accounts payable                            $  1,880,418        $  1,182,877
   Accrued liabilities                              153,467             145,422
   Federal, state and foreign income
     taxes payable                                  191,509             155,063
   Accrued profit-sharing contribution              179,100             148,771
   Deferred income taxes                                  -              10,796
                                                  ---------           ---------
           Total current liabilities              2,404,494           1,642,929
                                                  ---------           ---------


Revolving credit facility                         8,878,830           4,918,830
Deferred income taxes                             5,565,973           8,654,698
                                                 ----------          ----------
                                                 14,444,803          13,573,528
                                                 ----------          ----------

Commitments (Note 6)

Stockholders' equity:
   Common stock, $1 par value:
     Authorized:  25,000,000 shares
     Issued:  12,751,100 shares in 1996
        and 12,711,100 shares in 1995            12,751,100          12,711,100
   Paid in capital                                3,648,333           3,485,487
   Retained earnings                             17,031,360          22,534,006
                                                 ----------          ----------
                                                 33,430,793          38,730,593

   Less treasury stock, at cost                     (98,653)                  -
                                                 ----------          ----------
                                                 33,332,140          38,730,593
                                                 ----------          ----------



        Total liabilities and
           stockholders' equity                 $50,181,437         $53,947,050
                                                 ==========          ==========

     The accompanying notes are an integral part of the financial statements
                                        

<PAGE>


                               EQUITY OIL COMPANY

                             STATEMENT OF OPERATIONS
              for the years ended December 31, 1996, 1995 and 1994



<TABLE>
<CAPTION>

                                                       1996              1995                 1994
                                                       ----              ----                 ----      
Revenues:
<S>                                             <C>               <C>                  <C>        
    Oil and gas sales                           $16,115,125       $12,259,739          $11,713,498
    Partnership income                              306,114           311,960              306,221
    Interest                                        140,053           221,020              244,054
    Other income                                    312,759           457,837              196,431
                                                 ----------        ----------           ----------
                                                 16,874,051        13,250,556           12,460,204
                                                 ----------        ----------           ----------

Expenses:
    Oil and gas leasehold operating costs         5,912,128         5,093,782            4,658,115
    Depreciation, depletion and amortization      4,292,237         3,843,442            5,011,155
    Impairment of proved oil and gas properties     237,279         2,471,146                    -
    Equity loss and impairment of investment
      in Symskaya Exploration, Inc.               9,204,394                 -                    -
    Leasehold abandonments                           87,464            30,597               60,545
    3-D seismic                                     757,964           237,604                    -
    Exploration                                   2,336,405         1,633,612            1,718,339
    General and administrative                    2,030,811         1,908,778            1,560,675
    Interest, net of interest capitalized
      of $364,637 in 1996 and$70,000 in 1995        164,678            72,625               87,308
                                                 ----------        ----------           ----------
                                                 25,023,360        15,291,586           13,096,137
                                                 ----------        ----------           ----------

         Loss before income taxes                (8,149,309)       (2,041,030)            (635,933)

Benefit from income taxes                        (2,646,663)         (786,218)            (275,103)
                                                 ----------        ----------           ----------

         Net loss                               $(5,502,646)      $(1,254,812)         $  (360,830)
                                                 ==========        ==========           ==========

Net loss per common share                       $     (0.43)      $      (.10)         $      (.03)
                                                 ==========        ==========           ==========

Weighted average shares outstanding              12,733,864        12,597,238           12,540,594
                                                 ==========        ==========           ==========
</TABLE>

     The accompanying notes are an integral part of the financial statements
                              
<PAGE>


                                               
                               EQUITY OIL COMPANY

                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                               for the years ended
                        December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>

                                                        Common Stock       Paid in     Retained      Treasury Stock
                                                   Shares       Amount     Capital     Earnings     Shares      Cost
                                                   ------       ------     ---------   ----------   ------      ----
<S>                                              <C>         <C>          <C>         <C>            <C>      <C>       
Balance at December 31, 1993                     12,583,631  $12,583,631  $2,904,792  $24,149,648    45,931   $ (86,358)
   Net loss                                                                              (360,830)
   Treasury stock purchased, $4.24 per share                                                          6,100     (25,852)
   Common stock issued for services,
     $4.00 per share                                 10,000       10,000      30,000
                                                 ----------   ----------   ---------   ----------    ------     -------
Balance at December 31, 1994                     12,593,631   12,593,631   2,934,792   23,788,818    52,031    (112,210)
   Net loss                                                                            (1,254,812)
   Treasury stock purchased, $3.79 per share                                                         13,500     (51,181)
   Common stock issued for services,
     $3.88 per share                                 12,000       12,000      34,500
   Treasury stock canceled, $2.49 per share         (65,531)     (65,531)    (97,860)               (65,531)    163,391
   Common stock issued on exercise
      of incentive stock options                    171,000      171,000     510,525
   Income tax benefit from exercise
      of incentive stock options                                             103,530
                                                 ----------   ----------   ---------    ----------   ------     -------
Balance at December 31, 1995                     12,711,100   12,711,100  $3,485,487  $ 22,534,006        -           -

   Net loss                                                                             (5,502,646)
   Treasury stock purchased, $3.40 per share                                                         29,000     (98,653)
   Common stock issued for services,
     $5.04 per share                                 20,500       20,500      82,813
   Common stock issued on exercise
      of incentive stock options                     19,500       19,500      64,875
   Income tax benefit from exercise
      of incentive stock options                                              15,158
                                                 ----------   ----------   ---------    ----------     ------    -------
Balance at December 31, 1996                     12,751,100  $12,751,100  $3,648,333  $ 17,031,360    29,000  $ (98,653)
                                                 ==========   ==========   =========    ==========    ======     ======
</TABLE>

     The accompanying notes are an integral part of the financial statements
                                  
<PAGE>


                                               
                               EQUITY OIL COMPANY

                             STATEMENT OF CASH FLOWS
              for the years ended December 31, 1996, 1995 and 1994


<TABLE>
<CAPTION>
                                                                             1996                 1995                1994
                                                                             ----                 ----                ----
Cash flows from operating activities:
<S>                                                                   <C>               <C>                      <C>       
   Net loss                                                           $(5,502,646)      $   (1,254,812)          $(360,830)
   Adjustments to reconcile net loss
     to net cash provided by operating activities:
       Impairment of proved oil and gas properties                        237,279            2,471,146                   -
       Equity loss and impairment of investment
          in Symskaya Exploration, Inc.                                 9,204,394                    -                   -
       Depreciation, depletion and amortization                         4,292,237            3,843,442           5,011,155
       Partnership distributions in excess of income                      134,892              144,717             137,023
       Property dispositions                                               87,464               43,227              60,545
       Change in other assets                                              42,113               21,057                   -
       Decrease in deferred income taxes                               (3,130,574)          (1,374,414)           (474,950)
       Common stock issued for services                                   103,313               46,500              40,000
       Increase (decrease) from changes in:
          Accounts receivable and operator advances                      (406,805)             133,624            (471,691)
          Other current assets                                              5,893                 (784)            (78,015)
          Accounts payable and accrued liabilities                        735,915               11,438            (368,649)
          Deferred lease rental revenue                                         -             (178,553)            178,553
          Income taxes payable/receivable                                   4,511              236,802              74,528
                                                                        ---------            ---------           ---------
            Net cash provided by operating activities                   5,807,986            4,143,390           3,747,669
                                                                        ---------            ---------           ---------
Cash flows from investing activities:
   Sale of temporary cash investments                                     906,165            1,510,761                   -
   Purchase of temporary cash investments                                       -                    -          (2,466,728)
   Advances to Symskaya Exploration                                    (3,043,952)          (2,745,319)         (1,696,261)
   Capital expenditures                                                (7,339,212)          (7,179,528)         (4,027,752)
   Proceeds from sale of property                                               -                    -              98,253
                                                                        ---------            ---------           ---------
            Net cash used in investing activities                      (9,476,999)          (8,414,086)         (8,092,488)
                                                                        ---------            ---------           ---------
Cash flows from financing activities:
   Exercise of incentive stock options                                     84,375              681,525                   -
   Increase in other assets                                                     -             (210,568)                  -
   Purchase of treasury stock                                             (98,653)             (51,181)            (25,852)
   Borrowings under revolving credit facility                           3,960,000            4,918,830                   -
   Payments on note payable                                                     -             (920,000)           (460,000)
                                                                        ---------            ---------           ---------
          Net cash provided by (used in)
              financing activities                                      3,945,722            4,418,606            (485,852)
                                                                        ---------            ---------           ---------
Net increase (decrease) in cash and cash equivalents                      276,709              147,910          (4,830,671)
Cash and cash equivalents at beginning of year                            511,252              363,342           5,194,013
                                                                        ---------            ---------           ---------
Cash and cash equivalents end of year                                $    787,961         $    511,252        $    363,342
                                                                        =========            =========           =========
Cash, cash equivalents and temporary
  cash investments at end of year                                    $    837,763         $  1,467,219        $  2,830,070
                                                                        =========            =========          ==========

Supplemental  disclosures  of cash flow  information:  Cash paid during the year
   for:
     Income taxes                                                    $    419,121        $     355,993        $    103,745
     Interest                                                        $    164,678        $      72,625        $     87,308

</TABLE>

     The accompanying notes are an integral part of the financial statements
                                                                   
<PAGE>


                               EQUITY OIL COMPANY

                          NOTES TO FINANCIAL STATEMENTS




1.       SIGNIFICANT ACCOUNTING POLICIES:

         A.     Equity Oil  Company  (the  Company)  is a  Colorado  corporation
                engaged in oil and gas  exploration,  development and production
                in the United States, Canada and Russia.

         B.    TEMPORARY CASH INVESTMENTS AND CASH EQUIVALENTS:

               Temporary cash investments  consist of U.S. Treasury Notes stated
               at cost which  approximates  market.  The Company  considers  all
               highly  liquid  debt  instruments   purchased  with  an  original
               maturity of three months or less to be cash equivalents.

         C.    ACCOUNTING FOR OIL AND GAS OPERATIONS:

               The Company  reports  using the  "successful  efforts"  method of
               accounting  for oil and gas  operations.  The use of this  method
               results in  capitalization  of those  costs  identified  with the
               acquisition,  exploration  and  development  of  properties  that
               produce revenue or, if in the development  stage, are anticipated
               to produce  future  revenue.  Costs of  unsuccessful  exploration
               efforts are expensed in the period in which it is determined that
               such  costs  are  not   recoverable   through  future   revenues.
               Geological and  geophysical  costs are expensed as incurred.  The
               costs of development wells are capitalized  whether productive or
               nonproductive.

               The Company annually assesses  undeveloped oil and gas properties
               for impairment.  The annual  impairment  represents  management's
               estimate of the decline in realizable  value  experienced  during
               the  year.  The  costs  of  proved  properties  which  management
               determines  are not  recoverable  are written  down in the period
               such  determination is made. The net capitalized  costs of proved
               oil and gas  properties are measured for impairment in accordance
               with SFAS No. 121 (see Note 2).

                The provision for  depreciation,  depletion and  amortization of
                proved oil and gas  properties  is  computed  using the units of
                production  method,  based  on  proved  oil  and  gas  reserves.
                Estimated  dismantlement,  restoration and abandonment costs are
                expected to be offset by estimated  residual values of lease and
                well  equipment.  Thus,  no  accrual  for  such  costs  has been
                recorded.


                                                    
<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



1.       SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

               
         D.    CONCENTRATION OF CREDIT RISK:

               Substantially all of the Company's accounts receivable are within
               the oil and gas industry,  primarily  from  purchasers of oil and
               gas (see Note 6).  Although  diversified  within many  companies,
               collectibility is dependent upon the general economic  conditions
               of the industry.  The receivables are not collateralized  and, to
               date, the Company has experienced minimal bad debts. The majority
               of the  Company's  cash,  cash  equivalents  and  temporary  cash
               investments is held by three  financial  institutions  located in
               Salt Lake City, Utah.

         E.    EQUIPMENT:

               The provision for  depreciation of equipment  (other than oil and
               gas equipment) is based on the  straight-line  method using asset
               lives as follows:

                         Office equipment                            10 years
                         Automobiles                                  3 years

               When equipment is retired or otherwise  disposed of, the cost and
               accumulated  depreciation  are removed  from the accounts and any
               resulting   gain  or  loss  is  included  in  the   Statement  of
               Operations.

         F.    FOREIGN OPERATIONS:

               Operations and  investments in Canada have been  translated  into
               U.S. dollar equivalents at the average rate of exchange in effect
               at the transaction date.  Foreign exchange gains or losses during
               1996, 1995 and 1994 were not material.

               Through  December 31, 1996,  the Company's  investment in Russia
               was composed of U.S. dollar expenditures (see Note 6).



<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



1.       SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

                
         G.    INCOME (LOSS) PER COMMON SHARE:

               Net  income  (loss)  per common  share is  computed  based on the
               weighted  average  number  of  common  shares  and  common  share
               equivalents  outstanding  during  the  year.  Primary  and  fully
               diluted net income  (loss) per common share are  essentially  the
               same.

         H.    ESTIMATES:

               The  preparation  of  financial  statements  in  conformity  with
               generally accepted  accounting  principles requires management to
               make estimates and assumptions  that affect the reported  amounts
               of assets and liabilities and disclosure of contingent assets and
               liabilities  at the  date  of the  financial  statements  and the
               reported  amounts of revenues and expenses  during the  reporting
               period. Actual results could differ from those estimates.

         I.    RECLASSIFICATIONS:

               Certain  balances in the  December  31,  1995 and 1994  financial
               statements  have been  reclassified  to conform  with the current
               year presentation.  These changes had no effect on the previously
               reported net loss,  total assets,  liabilities  or  stockholders'
               equity.


2.       IMPAIRMENT OF PROVED OIL AND GAS PROPERTIES:

         Included in the Statement of Operations for 1995 is a non-cash  charge
         for the  impairment of proved oil and gas  properties in the amount of
         $2,471,146  ($1,557,563  after tax),  which results from the Company's
         adoption of SFAS No.121,  Accounting  for the Impairment of Long Lived
         Assets and for Assets Held for Disposal (SFAS No. 121), effective July
         1, 1995. SFAS No.121 requires successful efforts companies to evaluate
         the  recoverability  of the net capitalized  costs of their proved oil
         and gas  properties  at a field level,  rather than on a  company-wide
         level as previously allowed by the Securities and Exchange Commission.
         The SFAS No.121  impairment  test  compares the expected  undiscounted
         future net  revenues  from each  producing  field with the related net
         capitalized costs at the end of each period.  When the net capitalized
         costs exceed the  undiscounted  future net  revenues,  the cost of the
         property is written  down to fair  value,  which is  determined  using
         discounted future net revenues from the producing field.

         The  Company  recorded  a  non-cash   impairment  charge  of  $237,279
         ($149,557 after tax) for 1996.


                                                     
<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



3.       INCOME TAXES:

         The benefit from income taxes consists of the following:

                                              1996          1995        1994
                                              ----          ----        ----
         Currently payable (receivable):
           U.S. income taxes (including
              alternative minimum tax)   $   185,082    $  188,666    $ (92,726)
           State income taxes                108,463        26,262       36,058
           Canadian income taxes             190,366       373,268      256,515
         Deferred tax benefit             (3,130,574)   (1,374,414)    (474,950)
                                           ---------     ---------      -------

                                         $(2,646,663)   $ (786,218)   $(275,103)
                                           =========      ========     ========


         The Company  accounts for income taxes in accordance with SFAS No. 109.
         Deferred  income taxes are provided on the  difference  between the tax
         basis of an asset or liability and its reported amount in the financial
         statements that will result in taxable or deductible  amounts in future
         years when the  reported  amount of the asset or liability is recovered
         or settled, respectively.

                                      
         The  components  of the net deferred tax  liability as of December 31,
         1996 and 1995 were as follows:

                                                            1996         1995
                                                            ----         ----

         Deferred tax assets:
           AMT credit and ITC carryforwards          $   326,104  $    670,771
           State income taxes                             42,347         9,709
           Deferred compensation                           9,211             -
           Geological and geophysical costs              439,306       181,989
           Capitalized interest                          204,755         8,957
           Foreign tax credit (FTC) carryforward         265,301       442,942
           Equity loss and impairment of investment
             in Symskaya Exploration, Inc.             3,283,105             -
           Other                                               -        34,296
                                                      ----------  ------------
                                                       4,570,129     1,348,664
           Valuation allowance                          (992,458)     (442,942)
                                                      ----------   -----------
           Total deferred tax asset                   $3,577,671  $    905,722
                                                       =========   ===========

         Deferred tax liabilities:
           Deferred income                                20,505        20,505
           Property and equipment                      9,012,408     9,420,819
           Pipeline partnership                           79,678       129,892
                                                     -----------   -----------
           Total deferred tax liability                9,112,591     9,571,216
                                                       ---------    ----------

         Net deferred tax liability                   $5,534,920    $8,665,494
                                                       =========     =========


         The net  deferred  tax  liability  as of December  31, 1996 and 1995 is
         reflected in the balance sheet as follows:

           Current deferred tax liability             $        -  $     10,796
           Current deferred tax asset                    (31,053)            -
           Long-term deferred tax liability            5,565,973     8,654,698
                                                       ---------     ---------

                                                      $5,534,920    $8,665,494
                                                       =========     =========



                                                  
<PAGE>

                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued

 .        INCOME TAXES, Continued:

          The benefit  from income  taxes  differs from the amount that would be
          provided by applying the statutory U.S. Federal income tax rate to the
          loss before income taxes for the following reasons:
<TABLE>
<CAPTION>

                                                                    1996                 1995                1994
                                                                    ----                 ----                ----

<S>                                                          <C>                    <C>                 <C>       
         Federal statutory tax benefit                       $(2,770,765)           $(693,948)          $(216,217)
         Increase (reduction) in taxes
           resulting from:
              State taxes (net of federal
               benefit)                                         (198,849)             (68,376)            (11,161)
              Canadian taxes (net of foreign
                 tax credits)                                   (107,549)             287,670             169,300
              Excess allowable percentage
               depletion                                        (171,724)            (166,509)           (186,418)
              Investment tax and other credits                  (124,933)            (145,055)            (30,607)
              Unrecognized capital loss related
                 to impairment of investment
                 in Symskaya Exploration, Inc.                   727,157                   -                    -
                                                               ---------             --------            --------
              Benefit from income taxes                      $(2,646,663)         $  (786,218)        $  (275,103)
                                                               =========             ========            ========
</TABLE>

         At  December  31,  1996,  the  Company  had  approximately  $122,000 of
         investment  tax  credit   carryforwards   that  will  expire  in  2001,
         approximately  $204,000 of alternative minimum tax credit carryforwards
         which can be carried forward indefinitely,  and approximately  $265,000
         of foreign tax credit carryforwards which expire in 2000.

4.       STOCK-BASED COMPENSATION PLAN

         At December  31,  1996,  the Company has one  stock-based  compensation
         plan,  which is described below. The Company applies APB Opinion No. 25
         and related Interpretations in accounting for its plan. Accordingly, no
         compensation  cost has been recognized for its fixed stock option plan.
         Had compensation cost for the Company's  stock-based  compensation plan
         been  determined  based on the fair value at the grant dates for awards
         under the plan  consistent  with the method of FASB  Statement 123, the
         Company's net loss and loss per share would have been  increased to the
         pro forma amounts indicated below:
                                         
                                                             1996          1995
                                                             ----          ----

         Net loss              As reported            $(5,502,646)  $(1,254,812)
                               Pro forma              $(5,635,133)  $(1,297,811)

         Loss per share        As reported                  $(.43)        $(.10)
                               Pro forma                    $(.44)        $(.10)

         Note:Primary and fully diluted loss per share are essentially the same.

         Under the 1993 Equity Oil Company  Incentive  Stock  Option  Plan,  the
         Company may grant options to its employees for up to 1.4 million shares
         of common  stock.  The  options  may take the form of  incentive  stock
         options,  non-qualified stock options,  and non-qualified stock options
         with tandem  stock  appreciation  rights.  The  exercise  price of each
         option  equals the market price of the  Company's  stock on the date of
         grant,  and an option's  maximum term is 10 years.  Options are granted
         from time to time at the discretion of the Board of Directors, and vest
         over periods of one to five years from the grant date.

         The fair value of each option  grant is  estimated on the date of grant
         using  the  Black-Scholes   option-pricing  model  with  the  following
         weighted-average   assumptions  used  for  grants  in  1995  and  1996,
         respectively:  expected  volatility  of 65  and 67  percent,  risk-free
         interest rates of 7.2 and 5.4 percent; expected lives of 5 and 5 years;
         dividend yield of zero for both years.

<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued

4.      STOCK-BASED COMPENSATION PLAN, Continued:


<TABLE>
<CAPTION>
                                                  1996                               1995                                1994
                                  -------------------------------------------------------------------------------------------
                                        Shares   Weighted-Average    Shares   Weighted-Average     Shares   Weighted-Average
Fixed Options                          (000)       Exercise Price    (000)       Exercise Price    (000)       Exercise Price
-------------                        ---------   ---------------------------   ---------------------------   ----------------
<S>                                       <C>        <C>              <C>          <C>                <C>        <C>  
Outstanding at beginning of year          904        $4.22            1,047        $4.28              817        $4.29
Granted                                   222         5.13              102         3.63              247         4.25
Exercised                                 (39)        3.94             (171)        3.98                -
Forfeited                                 (11)        4.38              (74)        4.75              (17)        4.17
                                          ---                           ---                           ---
Outstanding at end of  year             1,076         4.42              904         4.22            1,047         4.28
                                       ------                          ----                        ------

Options exercisable at year-end           775                           743                           788
Weighted-average fair value of
   options granted during the year      $5.13                         $3.63                         $4.25
</TABLE>

     The  following  table  summarizes  information  about fixed  stock  options
outstanding at December 31, 1996:
<TABLE>
<CAPTION>

                                                           Options Outstanding                  Options Exercisable
                          Number           Weighted-Average                                Number
    Range of            Outstanding            Remaining        Weighted-Average         Exercisable        Weighted-Average
  Exercise Prices       at 12/31/96        Contractual Life      Exercise Price          at 12/31/96          Exercise Price
-------------------   ---------------    --------------------  ------------------      ---------------      ----------------
<C>      <C>               <C>                  <C>                 <C>                     <C>                 <C>  
$3.56 to $3.63             238,000              7.69   years        $3.59                   202,800             $3.58
$3.88 to $4.25             421,000              6.42                $4.12                   377,800             $4.40
$4.63 to $5.00             113,000              6.23                $4.96                   113,000             $4.96
$5.13 to $5.13             227,500             10.27                $5.13                     5,000             $5.13
$5.50 to $6.00              76,000              3.62                $5.77                    76,000             $5.77
                       -----------              ----                -----                 ---------             -----
                         1,075,500              7.30                $4.42                   774,600             $4.26
                         =========              ====                =====                   =======             =====
</TABLE>

<PAGE>

5.           GEOGRAPHIC SEGMENT INFORMATION:

             The Company has oil and gas  operations  in the U.S.,  Canada,  and
             Russia.  Operating profit is total revenue less operating expenses.
             In computing operating profit, general and administrative  expenses
             and interest  expense have not been deducted.  Identifiable  assets
             are those  assets of the  Company  that are  identifiable  with the
             operations of each geographical area.

             Revenue from a major U.S. oil company  accounted for  approximately
             45 percent of total  revenues in 1996, 51 percent of total revenues
             in 1995, and 50 percent of total revenues in 1994.

<TABLE>
<CAPTION>
             Information about the Company's  operations in the U.S., Canada and
             Russia for the years ended December 31, 1996,  1995, and 1994 is as
             follows:

              1996:                           United States      Canada            Russia                 Total
              -----                           -------------      ------            ------                 -----

<S>                                             <C>           <C>           <C>            <C>         
              Revenues                          $14,230,763   $ 2,643,288   $          -   $ 16,874,051
                                                 ==========     =========              =     ==========
                                                 
              Operating profit (loss)           $ 2,024,752   $ 1,225,822   $ (9,204,394)  $ (5,953,820)
              General and administrative
                expenses                         (2,030,811)            -              -     (2,030,811)
              Interest expense                     (164,678)            -              -       (164,678)
                                                  ---------      --------      ---------      ---------
                                             
                Income (loss) before
                  income taxes                  $  (170,737)  $ 1,225,822   $ (9,204,394)  $ (8,149,309)
                                                  =========     =========      =========      ========= 

              Identifiable assets at
                December 31, 1996               $46,031,896   $ 4,149,541   $          -   $ 50,181,437
                                                 ==========     =========              =     ==========  
              Additions to property and
                equipment                       $ 7,241,452   $    97,760   $          -   $  7,339,212
                                                  =========     =========              =      =========
              Depreciation, depletion and
                amortization                    $ 3,838,202   $   454,035   $          -   $  4,292,237
                                                  =========     =========              =      =========  

</TABLE>

                                               
<PAGE>


                                                EQUITY OIL COMPANY

                                     NOTES TO FINANCIAL STATEMENTS, Continued


<TABLE>
<CAPTION>

5.            GEOGRAPHIC SEGMENT INFORMATION, Continued:

              1995:                            United States     Canada         Russia       Total
              -----                            -------------     ------         ------       -----

<S>                                             <C>           <C>                         <C>        
              Revenues                          $10,819,553   $ 2,431,003             -   $13,250,556
                                                 ==========     =========                  ==========

              Operating profit (loss)           $(1,391,469)  $ 1,331,842             -   $   (59,627)
              General and administrative
                expenses                         (1,908,778)            -             -    (1,908,778)
              Interest expense                      (72,625)            -             -       (72,625)
                                                  ---------     ---------                   ---------

                Income (loss)
                  before income taxes           $(3,372,872)  $ 1,331,842             -   $(2,041,030)
                                                  =========     =========                   =========

              Identifiable assets at
                December 31, 1995               $43,512,850   $ 4,273,758   $ 6,160,442   $53,947,050
                                                 ==========     =========     =========    ==========
              Additions to property and
                equipment                       $ 6,127,455   $ 1,052,073             -   $ 7,179,528
                                                  =========     =========                   =========
              Depreciation, depletion and
                amortization                    $ 3,406,947   $   436,495             -   $ 3,843,442
                                                  =========     =========                   =========



              1994:                            United States       Canada        Russia       Total
              -----                            -------------       ------        ------       -----

              Revenues                          $10,414,683   $ 2,045,521             -   $12,460,204
                                                 ==========     =========                  ==========

              Operating profit (loss)           $  (38,477)  $  1,050,527             -   $ 1,012,050
              General and administrative
                expenses                        (1,560,675)             -             -    (1,560,675)
              Interest expense                     (87,308)             -             -       (87,308)
                                                 ---------      ---------                   ---------

                Income (loss) before
                  income taxes                  $(1,686,460)  $ 1,050,527             -   $  (635,933)
                                                  =========     =========                     =======

              Identifiable assets at
                December 31, 1994               $45,066,213   $ 3,427,000   $ 3,415,123   $51,908,336
                                                 ==========     =========     =========    ==========
              Additions to property and
                equipment                       $ 3,576,119   $   451,633             -   $ 4,027,752
                                                  =========     =========                   =========
              Depreciation, depletion and
                amortization                    $ 4,668,497   $   342,658             -   $ 5,011,155
                                                  =========     =========                   =========

</TABLE>






                                                   
<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



6.            SYMSKAYA EXPLORATION:

              The  Company  conducts   operations  in  Russia  through  its  50%
              ownership  interest  in  Symskaya  Exploration,  Inc.  (Symskaya).
              Symskaya  holds a Combined  License (the License)  which grants it
              the exclusive right to explore,  develop and produce  hydrocarbons
              on a contract area totaling  approximately  1,100,000 acres in the
              Yenisysk   District  of  the  Krasnoyarsk   Krai  in  the  Russian
              Federation. The License has a primary term of 25 years.

              The  work  to be  performed  and the  obligations  and  rights  of
              Symskaya  are set forth in a License  Agreement  and a  Production
              Sharing  Agreement  (PSA) which are integral parts of the License.
              Under the License and PSA,  Symskaya will provide  funding for all
              exploration  and development and will recover these costs from 80%
              of  hydrocarbon  production  after  payment of an 8% royalty.  The
              remaining 20% of any hydrocarbon production,  net of royalty, will
              be shared by Symskaya and the Russian government based on the rate
              of production.

              Minimum  expenditures  required  under the  License  and PSA total
              $12,000,000 during the first five years of the License term, which
              began on November 15, 1993. As of December 31, 1996,  Symskaya had
              satisfied all of the minimum expenditures
              required.

              Leucadia National Corporation (Leucadia) acquired 50% of the stock
              of  Symskaya  effective  January 1, 1994,  in  exchange  for their
              commitment to spend up to  $6,000,000,  in an amount equal to that
              spent by the  Company,  towards the Symskaya  project  through the
              drilling,  completion  and/or  plugging  and  abandonment  of  the
              initial test well, the Lemok #1. No gain or loss was recognized on
              the  sale  of   Symskaya   stock  to   Leucadia.   Pursuant  to  a
              Shareholders' Agreement, Leucadia was not required to pay any part
              of the amounts  previously  advanced  by the Company  under a Loan
              Agreement with  Symskaya,  with the exception of one-half (1/2) of
              the  interest  on  a  $1,740,519  loan  between  the  Company  and
              Symskaya.  The loan reflects the initial investment by the Company
              in Symskaya  prior to Leucadia's  ownership.  The interest rate on
              the loan was fixed by the Company  and  Leucadia at prime plus two
              percent  (2%),  with a cap of twelve  percent (12%) from and after
              January 1, 1994.  The interest rate in effect at December 31, 1996
              was 10.5%.

              Amounts advanced by the Company and Leucadia after January 1, 1994
              will  be  treated  as  interest-bearing  advances  or  equity,  as
              mutually  agreed upon by the respective  companies.  The agreement
              with Leucadia  also  requires  that Leucadia  share equally in the
              payment of the one (1%)  percent  royalty  obligation  in favor of
              Coastline  on  future  revenues  from the  Symskaya  project.  The
              Company's President serves on Leucadia's Board of Directors.

              The Company's  investment in Symskaya is being accounted for using
              the equity method of accounting.



                                                  
<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued

6.            SYMSKAYA EXPLORATION, continued:
             
              In August of 1996,  Symskaya  plugged and  abandoned  the Lemok #1
              well. Symskaya subsequently charged the drilling costs of the well
              to expense.  The Company's equity share of the loss in Symskaya of
              $5,250,000  was reflected in the  Statement of Operations  for the
              quarter ended September 30, 1996.

              Subsequent  to the plugging of the Lemok #1 well,  the Company and
              Leucadia  agreed to suspend  interest  payments on Symskaya's note
              with the  Company.  Due to the amount of  uncertainty  relating to
              Symskaya's   obtaining  of   additional   outside   financing  and
              proceeding  with  development  of the License area,  the remaining
              capitalized  costs were written off in the fourth quarter of 1996,
              resulting in a charge to expense of $3,954,394. The Company has no
              current plans to fund future exploratory drilling.

              Summarized financial information concerning Symskaya Exploration,
              Inc. is as follows:

<TABLE>
<CAPTION>
                                                                 As of                   As of
                                                            December 31,             December 31,
                                                                 1996                     1995
                                                            ------------              -----------
<S>                                                        <C>                       <C>         
              Current assets                               $     249,692             $    550,258
              Non-current assets                               5,876,700               10,329,991
              Total assets                                     6,126,392               10,880,249

              Current liabilities                                 98,210                  334,573
              Non-current liabilities                         12,653,243               10,018,204
              Accumulated deficit                            (11,102,325)                (128,205)
              Total liabilities and stockholders' equity       6,126,392               10,880,249


</TABLE>

                                                  
                                    For the year ended     For the year ended
                                       December 31,             December 31,
                                           1996                     1995
                                    ------------------     ------------------

              Gross revenues          $         59,405               $ 69,423
              Net (loss)                 $ (10,974,120)             $  (1,294)

<PAGE>



                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued

7.            NOTE PAYABLE:

              In March of 1995,  the Company  obtained a $20  million  Borrowing
              Base Credit Facility (the Facility), with an initial commitment of
              $10 million.  The terms of the Facility call for interest payments
              only,  at the  lower of prime or LIBOR  plus 2%,  for 3 years,  at
              which time it converts to a 3 year term note. An unused commitment
              fee of 3/8% will be charged to the  Company  based on the  average
              daily   unused   portion  of  the   Facility.   The   Facility  is
              collateralized  by all assets of the  Company.  The  Company  used
              proceeds from the Facility to retire its previous outstanding Note
              Payable in the amount of  $920,000.  As of  December  31, 1996 the
              outstanding  balance  under  the  Facility  was  $8,878,830  at an
              average interest rate of 7.69%.

              Future  maturities  on the Facility as of December 31, 1996 are as
              follows:

                        1997           $              -
                        1998                          -
                        1999                  1,479,805
                        2000                  2,959,610
                        2001                  2,959,610
                        2002                  1,479,805
                                              ---------
                                             $8,878,830

              The  Facility  contains  provisions  relating  to  maintenance  of
              certain financial  ratios,  as well as restrictions  governing its
              use. Under  covenants  contained in the Facility,  the Company has
              agreed,  among other things,  not to advance any proceeds from the
              Facility to Symskaya, not to pay dividends,  and not to merge with
              or acquire any other  company  without  the prior  approval of the
              bank.

              As of December 31, 1996,  the Company was in  compliance  with all
              covenants  contained in the  Facility.  Facility  fees,  which are
              reflected as other assets in the  accompanying  Balance Sheet, are
              being amortized on a straight line basis over 60 months.
<PAGE>



                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued

8.            QUARTERLY FINANCIAL DATA (Unaudited):

              Quarterly financial  information for the years ended December 31,
              1996 and 1995 is as follows:

<TABLE>
<CAPTION>
              1996 Quarter Ended:              December 31       September 30     June 30                 March 31
                                           -----------------  ---------------   -------------------  -------------

<S>                                             <C>                 <C>                <C>                 <C>        
              Net revenues                      $ 4,653,388         $ 4,049,173        $ 3,985,332         $ 3,733,346

              Gross margin                       (4,056,478)         (4,401,235)         1,372,329             678,753

              Net income (loss)                  (3,563,431)         (2,760,271)           715,349             105,707

              Net income (loss) per
                 common share                         $(.28)              $(.22)              $.06               $ .01
                                                       ====                ====                ===                ====
</TABLE>


              Note:  Third  quarter  gross  margin  includes the effects of the
              equity loss in Symskaya  Exploration,  Inc.  Fourth  quarter gross
              margin   includes  the  writedown  of  the   Company's   remaining
              investment in Symskaya Exploration, Inc. See Note 6.

<TABLE>
<CAPTION>
              1995 Quarter Ended:              December 31       September 30     June 30                 March 31
                                           -----------------  ---------------   -------------------  -------------

<S>                                             <C>                 <C>                <C>                  <C>        
              Net revenues                      $ 3,230,759         $ 3,062,833        $ 3,180,505          $ 3,097,602

              Gross margin                          148,738          (1,594,099)           469,916              236,961

              Net income (loss)                    (168,165)         (1,258,857)            62,105              110,105

              Net income (loss) per
                 common share                         $(.01)              $(.10)              $.00                 $.01
                                                       ====                ====                ===                  ===

</TABLE>

              Note:  Third  quarter  gross  margin  includes the effects of the
              adoption  of SFAS No.  121,  which was adopted as of July 1, 1995.
              See Note 2.





                                                    
<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



9.            DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES:

<TABLE>
<CAPTION>
              CAPITALIZED COSTS:
                                                    United States           Canada             Russia                Total
              1996:

<S>                                                     <C>                 <C>                   <C>                <C>            
              Unproved oil and gas properties           $  2,532,503        $     3,224           $                  $  2,565,727
              Proved oil and gas properties               93,837,818          8,978,498                              102,816,316
                                                          ----------          ---------                              -----------
                                                          96,370,321          9,011,722                              105,382,043
              Accumulated depreciation,
                depletion and amortization               (55,259,210)        (5,996,677)                             (61,255,887)
                                                          ----------          ---------                               ----------

              Net capitalized costs                     $ 41,111,111        $ 3,015,045                             $ 44,126,156
                                                          ==========          =========                               ===========
              Symskaya, equity method
                (see Note 6)                                                                      $        -
                                                                                                   =========

              1995:

              Unproved oil and gas properties           $  2,378,122        $    90,290                             $  2,468,412
              Proved oil and gas properties               87,200,659          8,894,955                               96,095,614
                                                          ----------         ----------                               ----------
                                                          89,578,781          8,985,245                               98,564,026
              Accumulated depreciation,
                 depletion and amortization              (51,531,172)        (5,601,882)                             (57,133,054)
                                                          ----------          ---------                               ----------

              Net capitalized costs                     $ 38,047,609        $ 3,383,363                             $ 41,430,972
                                                          ==========          =========                               ===========
              Symskaya, equity method
                 (see Note 6)                                                                    $ 6,160,442        $  6,160,442
                                                                                                   =========          ===========


              1994:

              Unproved oil and gas properties           $  2,270,014        $    99,464                             $   2,369,478
              Proved oil and gas properties               84,234,955          7,852,281                                92,087,236
                                                          ----------          ---------                                ----------
                                                          86,504,969          7,951,745                                94,456,714
              Accumulated depreciation,
                 depletion and amortization              (48,686,141)        (5,174,561)                              (53,860,702)
                                                          ----------          ---------                                ----------

              Net capitalized costs                     $ 37,818,828        $ 2,777,184                             $  40,596,012
                                                          ==========          =========                                ==========
              Symskaya, equity method
                 (See Note 6)                                                                    $ 3,415,123        $   3,415,123
                                                                                                   =========           ==========
</TABLE>



                                                   
<PAGE>


                                                EQUITY OIL COMPANY

                                     NOTES TO FINANCIAL STATEMENTS, Continued

9.            DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES, Continued:

<TABLE>
<CAPTION>
              COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION AND DEVELOPMENT ACTIVITIES:


              1996:                                     United States           Canada               Russia               Total

              Acquisition of properties:
<S>                                                     <C>                   <C>                 <C>                <C>         
                Proved                                  $  2,038,244          $       -           $         -        $  2,038,244
                Unproved                                     474,757                  -                     -             474,757
              Exploration costs                            4,492,876             30,838                     -           4,523,714
              Development costs                            3,287,637             43,728                     -           3,331,365
              Symskaya, equity method                              -                  -             3,043,952           3,043,952


              1995:

              Acquisition of properties:
                 Proved                                 $  2,654,651          $ 405,410                     -        $  3,060,061
                 Unproved                                    674,146                  -                     -             674,146
              Exploration costs                            1,654,022             30,969                     -           1,684,991
              Development costs                            2,709,192            835,415                     -           3,544,607
              Symskaya, equity method                              -                  -           $ 2,745,319           2,745,319


              1994:

              Acquisition of properties:
                 Proved                                $       2,791                  -                     -       $       2,791
                 Unproved                                    601,836                  -                     -             601,836
              Exploration costs                            1,568,654          $ 439,805                     -           2,008,459
              Development costs                            2,803,694            174,639                     -           2,978,333
              Symskaya, equity method                              -                  -           $ 1,696,261           1,696,261


</TABLE>




                                                     
<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



9.            DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES, Continued:
<TABLE>
<CAPTION>

RESULTS OF OPERATIONS (Unaudited):

1996:                                                          United States          Canada           Russia               Total
-----                                                          -------------          ------           ------               -----

<S>                                                           <C>                  <C>               <C>                 <C>       
Oil and gas sales                                             $ 13,508,077         $ 2,607,048                         $ 16,115,125
Production costs                                                (4,976,633)           (935,495)                          (5,912,128)
Exploration expenses                                            (3,153,897)            (27,936)                          (3,181,833)
Depreciation, depletion and amortization                        (3,838,202)           (454,035)                          (4,292,237)
Impairment of proved
    oil and gas properties                                        (237,279)                  -                             (237,279)
Equity loss and impairment of investment
    in Symskaya Exploration, Inc.                                                                    $ (9,204,394)       (9,204,394)
                                                               -----------          ----------        -----------       -----------
                                                                 1,302,066           1,189,582         (9,204,394)       (6,712,746)
Imputed income tax benefit (expense)                              (239,514)           (258,048)         3,283,105         2,785,543
                                                               -----------          ----------        -----------       -----------
Results of operations from producing activities                $ 1,062,552        $    931,534         (5,921,289)     $ (3,927,203)
                                                                ==========          ==========        ===========        ==========

1995:

Oil and gas sales                                              $ 9,803,677          $2,456,062                          $12,259,739
Production costs                                                (4,455,069)           (638,713)                          (5,093,782)
Exploration expenses                                            (1,877,840)            (23,973)                          (1,901,813)
Depreciation, depletion and amortization                        (3,406,947)           (436,495)                          (3,843,442)
Impairment of proved
    oil and gas properties                                      (2,471,146)                  -                           (2,471,146)
                                                                ----------          -----------                          -----------
                                                                (2,407,325)          1,356,881                           (1,050,444)
Imputed income tax benefit (expense)                             1,056,755            (534,319)                             522,436
                                                                ----------          ----------                           ----------
Results of operations from producing activities                $(1,350,570)        $   822,562                        $    (528,008)
                                                                ==========          ==========                           ==========

1994:

Oil and gas sales                                              $ 9,648,390         $ 2,065,108                          $11,713,498
Production costs                                                (4,031,030)           (627,085)                          (4,658,115)
Exploration expenses                                            (1,753,632)            (25,252)                          (1,778,884)
Depreciation, depletion and amortization                        (4,668,497)           (342,658)                          (5,011,155)
                                                                -----------         ----------                          -----------
                                                                  (804,769)          1,070,113                              265,344
Imputed income tax benefit (expense)                               625,718            (476,200)                             149,518
                                                               -----------          ----------                         ------------
Results of operations from producing activities              $    (179,051)       $    593,913                        $     414,862
                                                               ===========          ==========                         ============
</TABLE>

The imputed income tax benefit (expense) is hypothetical and determined  without
regard to the Company's  deduction for general and  administrative  and interest
expense.





                                                    
<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued




9. DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES, Continued:

RESERVES AND FUTURE NET CASH FLOWS (Unaudited):
 
ESTIMATES OF PROVED OIL AND GAS RESERVES
   
The following  tables present the Company's  estimates of its proved oil and gas
reserves. The Company emphasizes that reserve estimates are inherently imprecise
and that estimates of new discoveries are more imprecise than those of producing
oil and gas  properties.  Accordingly,  the  estimates are expected to change as
future  information  becomes  available.  Reserve  estimates are prepared by the
Company, and audited by the Company's independent petroleum reservoir engineers,
Fred S.  Reynolds  and  Associates,  who have issued a report  expressing  their
opinion that the reserve  information in the following  tables complies with the
applicable rules  promulgated by the Securities and Exchange  Commission and the
Financial  Accounting  Standards Board.  The volumes  presented on the following
pages are in thousands of barrels for oil and  thousands of mcf for gas.
<TABLE>
<CAPTION>

                                                  United States             Canada                Total
December 31, 1996:                               Oil          Gas        Oil        Gas        Oil        Gas
                                             -------      -------    -------    -------    -------    -------

Proved developed and undeveloped reserves:
<S>                                            <C>         <C>         <C>        <C>        <C>       <C>   
  Beginning of year                            6,563       14,819      1,187      3,205      7,750     18,024
  Revisions of previous estimates                176         (233)        49        104        225       (131)
  Acquisitions of minerals in place              949           38       --         --          949         38
  Sales of minerals in place                      (6)        (214)      --          (54)        (6)      (268)
  Extensions and discoveries                      88        1,827       --           40         88      1,867
  Production                                    (518)      (1,325)       (119)      (588)      (637)    (1,913)
                                             -------      -------    -------    -------    -------    -------
  End of year                                  7,252       14,912      1,117      2,707      8,369     17,617
                                             =======      =======    =======    =======    =======    =======

Proved developed reserves:
  Beginning of year                            6,527       11,238      1,139      3,068      7,666     14,306
  End of year                                  7,219       11,133      1,117      2,707      8,336     13,840

December 31, 1995:

Proved developed and undeveloped reserves:
  Beginning of year                            6,252       13,673      1,055      3,539      7,307     17,212
  Revisions of previous estimates                 98          (24)         4       (189)       102       (213)
  Acquisition of minerals in place               701        1,129         61        152        762      1,281
  Extensions and discoveries                       3          921        196        274        198      1,195
  Production                                    (491)         (88)      (129)      (571)      (619)    (1,451)
                                             -------      -------    -------    -------    -------    -------
  End of year                                  6,563       14,819      1,187      3,205      7,750     18,024
                                             =======      =======    =======    =======    =======    =======

Proved developed reserves:
  Beginning of year                            6,185        8,490      1,042      3,539      7,227     12,029
  End of year                                  6,527       11,238      1,139      3,068      7,666     14,306

</TABLE>
                                                     
<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



9. DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES, Continued:
        
RESERVES AND FUTURE NET CASH FLOWS (Unaudited):
        
<TABLE>
<CAPTION>
ESTIMATES OF PROVED OIL AND GAS RESERVES

                                                  United States              Canada               Total
  December 31, 1994:                             Oil          Gas        Oil        Gas        Oil        Gas
                                             -------      -------    -------    -------    -------    -------
         
  Proved developed and undeveloped reserves:
<S>                                            <C>         <C>         <C>        <C>        <C>       <C>   
  Beginning of year                            6,644       12,969        958      3,798      7,602     16,767
  Revisions of previous estimates                 80         (482)       139       (131)       219       (613)
  Acquisition of minerals in place                --           56       --         --         --           56
  Extensions and discoveries                      18        2,010         78        112         96      2,122
  Production                                    (490)        (880)      (120)      (240)      (610)    (1,120)
                                             -------      -------    -------    -------    -------    -------
  End of year                                  6,252       13,673      1,055      3,539      7,307     17,212
                                             =======      =======    =======    =======    =======    =======
Proved developed reserves:
  Beginning of year                            6,584        8,374        919      3,798      7,503     12,172
  End of year                                  6,185        8,490      1,042      3,539      7,227     12,029

</TABLE>

STANDARDIZED  MEASURE OF  DISCOUNTED  FUTURE NET CASH FLOWS AND CHANGES  THEREIN
RELATING TO PROVED OIL AND GAS RESERVES (Unaudited):


                                                  Thousands of Dollars
1996:                                      United States   Canada        Total

Future cash inflows                         $ 230,760    $  28,073    $ 258,833
Future production and development costs       (98,696)      (6,263)    (104,959)
Future income taxes                           (37,081)      (8,872)     (45,953)
                                            ---------    ---------    ---------
Future net cash flows                          94,983       12,938      107,921

10% annual discount for estimated timing
   of cash flows ($21,687 related to
   future income taxes)                       (47,336)      (5,849)     (53,185)
                                            ---------    ---------    ---------

Standardized measure of discounted future
   net cash flows                           $  47,647    $   7,089    $  54,736
                                            =========    =========    =========









<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued


9. DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES, Continued:

STANDARDIZED  MEASURE OF  DISCOUNTED  FUTURE NET CASH FLOWS AND CHANGES  THEREIN
RELATING TO PROVED OIL AND GAS RESERVES (UNAUDITED), Continued:

                                                  Thousands of Dollars
1995                                       United States   Canada       Total
----                                       -------------   -------     -------

Future cash inflows                         $ 148,257    $  20,381    $ 168,638
Future production and development costs       (76,234)      (4,705)     (80,939)
Future income taxes                           (16,654)      (6,033)     (22,687)
                                            ---------    ---------    ---------
      Future net cash flows                    55,369        9,643       65,012

10% annual discount for estimated timing
   of cash flows ($10,361 related to
   future income taxes)                       (30,540)      (4,025)     (34,565)
                                            ---------    ---------    ---------

Standardized measure of discounted future
   net cash flows                           $  24,829    $   5,618    $  30,447
                                            =========    =========    =========


1994:

Future cash inflows                         $ 132,638    $  20,304    $ 152,942
Future production and development costs       (75,306)      (5,476)     (80,782)
Future income taxes                           (12,531)      (5,887)     (18,418)
                                            ---------    ---------    ---------
      Future net cash flows                    44,801        8,941       53,742

10% annual discount for estimated timing
   of cash flows ($8,567 related to
   future income taxes)                       (25,688)      (3,832)     (29,520)
                                            ---------    ---------    ---------

Standardized measure of discounted future
   net cash flows                           $  19,113    $   5,109    $  24,222
                                            =========    =========    =========


Future  net cash flows  were  computed  using  year-end  prices  and costs,  and
year-end  statutory  tax rates with  consideration  of future tax rates  already
legislated  (adjusted for permanent  differences  that related to proved oil and
gas reserves).







                                                   
<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued

9. DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES, Continued:

STANDARDIZED  MEASURE OF  DISCOUNTED  FUTURE NET CASH FLOWS AND CHANGES THEREIN
RELATING TO PROVED OIL AND GAS RESERVES (Unaudited), Continued:

Principal sources of change in the standardized measure of discounted future net
cash flow are as follows:

                                                      Thousands of Dollars
                                                  1996        1995        1994
                                                  ----        ----        ----

Sales and transfers of oil and gas produced,
   net of production costs                     $(10,203)   $ (7,166)   $ (7,055)
Net changes in prices and production costs       27,483       3,147       6,363
Extensions and discoveries
   less related costs                             2,374       1,274       1,016
Purchases of minerals in place                    7,174       3,804          18
Sales of minerals in place                         (116)         --          --
Changes in estimated future development costs       938        (203)      6,126
Revisions of previous quantity estimates          1,495         369         592
Accretion of discount                             4,286       3,409       2,192
Net change in income taxes                      (12,045)     (1,969)     (1,812)
Changes in production rates (timing) and other    2,903       3,561         377
                                               --------    --------    --------

                                               $ 24,289    $  6,226    $  7,817
                                               ========    ========    ========


                                                              


<PAGE>




ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES:

None

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF COMPANY:

The  information   contained  under  the  headings  Election  of  Directors  and
Continuing  Directors and Executive  Officers  contained on pages 2 and 3 in the
definitive  proxy statement to be filed in connection with the Company's  annual
meeting on May 14, 1997 is  incorporated  herein by  reference in answer to this
item.

ITEM 11.  EXECUTIVE COMPENSATION

The information  contained under the heading  Executive  Compensation on pages 6
through 9 in the definitive  proxy  statement to be filed in connection with the
Company's annual meeting on May 14, 1997 is incorporated  herein by reference in
answer to this item.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:

The information  contained under the headings  Security  Ownership of Management
and Voting Securities & Principal  Holders Thereof,  contained on pages 4 and 11
in the definitive  proxy  statement to be filed in connection with the Company's
annual meeting on May 14, 1997 is incorporated  herein by reference in answer to
this item.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.




<PAGE>



PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:



(a) (1)  Financial Statements:
                                                                    Page
                                                                    ----
   Report of Independent Accountants                                  19 

   Financial Statements:

     Balance Sheet as of December 31, 1996 and 1995                   20

     Statement of  Operations  for the years
      ended December 31, 1996, 1995 and 1994                          22

     Statement of Changes in Stockholders' Equity for the years
      ended December 31, 1996, 1995 and 1994                          23

     Statement of Cash Flows for the years
      ended December 31, 1996, 1995 and 1994                          24

     Notes to Financial Statements                                    25

     (2) Financial Statements of Symskaya Exploration, Inc.           47

(3)  Exhibits

    (3) (i) Restated Articles of Incorporation.  Incorporated by reference from
            the annual report on Form 10K for the year ended December 31, 1995.

        (ii) By-Laws.  Incorporated  by reference from the annual report on Form
             10K for the year ended December 31, 1995.

    (21) Subsidiaries.  Incorporated by reference from the annual report on Form
         10K for the year ended December 31, 1995.

    (23) Consent of Experts. Consent of Coopers & Lybrand L.L.P.
         regarding Form S-8 Registration                              58

(b)Reports on Form 8-K

     None




<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

   EQUITY OIL COMPANY


   By  /s/ Paul M. Dougan
       ------------------
       Paul M. Dougan
       President
       Chief Executive Officer


   By  /s/ Clay Newton
       --------------- 
       Clay Newton
       Treasurer
       Chief Financial Officer
       Principal Accounting Officer

Date: February 27, 1997

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.



     /s/ David W. Allen                        /s/ Joseph C. Bennett
     ------------------                        ---------------------
          Signature                                   Signature

          Director                                     Director
          --------                                     --------
           Title                                        Title

        March 3, 1997                              March 3, 1997
        -------------                              -------------
            Date                                        Date


   /s/ Douglas W. Brandrup                    /s/ William D. Forster
   -----------------------                    ----------------------
          Signature                                  Signature

           Director                                   Director
           --------                                   --------
            Title                                       Title

        March 3, 1997                              March 3, 1997
        -------------                              -------------
            Date                                        Date